Jess owns a firm that uses labour (L) and capital (C) to sell widgets (X), according to the following production function:X = F(L,C) = ln(L) + ln(C)Jesse buys her factors and sells her output in perfectly competitive markets. The market prices for L, C and W are a, r and p, respectively. What is the firm’s profit function. What is the firm's marginal product of labour , marginal product of capital and marginal rate of technical substitution Does the firm exhibit a diminishing marginal product of capital?What is the firms demand functions for labour and capital. Say the central bank decides to increase interest rates, causing ? to go up. What effect will this have on the firm’s use of L and C? What effect will it have on output (X) and profits?

Since you have posted a question with multiple sub-parts, we will provide the solution to only the…

Answered: Jess owns a firm that uses labour (L)…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Jess owns a firm that uses labour (L) and capital (C) to sell widgets (X), according to the following production function:

X = F(L,C) = ln(L) + ln(C)

Jesse buys her factors and sells her output in perfectly competitive markets. The market prices for L, C and W are a, r and p, respectively.

What is the firm’s profit function.
What is the firm's marginal product of labour , marginal product of capital and marginal rate of technical substitution
Does the firm exhibit a diminishing marginal product of capital?
What is the firms demand functions for labour and capital.
Say the central bank decides to increase interest rates, causing ? to go up. What effect will this have on the firm’s use of L and C? What effect will it have on output (X) and profits?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 18 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions